American Enterprise Institute: Health and Poverty – The Case for Work

WASHINGTON, April 30 -- The American Enterprise Institute issued the following report:

Executive Summary

Labor force participation problems among the prime-age population in the US remain one of the most pressing policy challenges of our time. Disability and health-related issues have been the top contributors to declines in labor force participation among people in their prime working years (age 25-54), causing both increased poverty rates and the perpetuation of poor health for many Americans. This makes connecting more prime-age people with disabilities and health issues to the labor force worthy of policy attention.

US policymakers can shape government programs to maximize health and well-being and make earned success accessible to all Americans, including those with disabilities and health issues. However, the current patchwork of safety-net programs for low-income Americans facing disabilities or health issues is severely flawed; it offers unrestricted material support while failing to help adults reach their own potential through employment.

Progress in the fight against poverty for these Americans will necessitate significant reforms to the framework of the US safety net. Yet our safety-net programs do not operate in a vacuum. We also need public and private efforts that support good health so that everyone is capable of reaping the benefits of work.

This report summarizes what we know about the intersection of health, labor force participation, and poverty. It points to a need for policies that encourage work among low-income adults with disabilities and health issues. This recommendation stems from an acknowledgment that prime-age people with disabilities and health issues are productive individuals who can make valuable contributions to their communities through work. Without work, many of them will fall into poverty and may never again see many of the social and economic benefits associated with employment.

Now is a fitting time to revisit the safety-net policies that serve prime-age people with disabilities and health issues as a way to improve both their labor force participation and poverty status. Research suggests that the health of prime-age people in the US is declining, and this has alarming implications for labor force participation and poverty. For example, the most common reason prime-age people give for not participating in the labor force is disability or ill health, overtaking the next three most common reasons combined. Additionally, the labor force participation rate among prime-age people who report a disability or fair or poor health is between one-third and one-half the rates of the general prime-age population. Unsurprisingly, this means that many prime-age people with disabilities or poor health suffer from poverty and miss many benefits associated with working.

The problem of disability and poor health is most salient for prime-age people with limited education. Not only do they suffer from these conditions at higher rates than their more educated counterparts, but also when a disability or health condition does exist, their labor force attachment is much weaker. Only two of every 10 prime-age people with a health issue and less than a high school education participate in the labor force, compared to 63 percent of those with a health issue and college degree, according to survey data. Safety-net programs are supposed to help many of these prime-age people get back on their feet, but by ignoring the importance of employment, they often lead to idleness and increased poverty.

This report summarizes existing research and presents original analyses of Current Population Survey and National Health Interview Survey data to explore the relationship among disabilities, poor health, labor force participation, and poverty. The conclusions lead to a proposed reform agenda focused on four areas. First, we need public health and social welfare policies that help people become healthy enough to work, with a focus on the social determinants of health. Second, the private sector should improve job conditions to support good health, especially for low-skill workers. Third, government safety-net programs should help prime-age benefit recipients get healthy and encourage them to gain employment. Finally, specific programs-- such as supportive employment--can be a useful tool to achieve better employment outcomes for people with disabilities and health issues.

Introduction

Former American Enterprise Institute President Arthur C. Brooks wrote that the War on Poverty "got the U.S. government into the business of treating people left behind by economic change as liabilities to manage rather than as human assets to develop."/1 This is no truer than in how government programs serve low-income people with disabilities or health issues in their prime working years: The government generally provides material assistance to these Americans without any presumption that they can work.

In fact, the federal government even requires that disabled people prove a permanent work incapacity to qualify for the two main disability assistance programs, Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). It also largely exempts people with health problems from work or work-related activity requirements in other federal safety-net programs, such as the Temporary Assistance for Needy Families (TANF) program and the Supplemental Nutrition Assistance Program (SNAP).

On its face, this policy approach might seem charitable; why expect people with mental and physical health limitations to work when the government can provide for them? This approach, however, ignores the reality that employment may actually improve the health and well-being of people in their prime working years while providing a more permanent path out of poverty. It also ignores the broader economic and social concerns associated with declining labor force participation among prime-age people and incorrectly assumes that people with disabilities are incapable of working.

The current design of federal programs for people with illnesses and disabilities traces back to a belief that tying safety-net policies to work simply punishes poor people for being poor. Over a half century ago, progressive scholars such as Frances Fox Piven and Richard Cloward argued against government efforts to impose any expectations, work or otherwise, on recipients of public aid because these requirements would violate their individual rights. Writing for the Nation in 1966, Piven and Cloward argued:

If new systems of income distribution continue to permit the professional bureaucracies to choose when to give and when to withhold financial relief, the poor will once again be surrendered to an arrangement in which their rights are diminished in the name of overcoming their vices./2

Scholars and commentators mounted similar criticisms against welfare reform in 1996 because it imposed sanctions on work-capable recipients of federal assistance who failed to meet work requirements./3 Recent efforts to impose work expectations on some Medicaid recipients were met with similar condemnations./4 But work is essential to health and well-being, especially for prime-age people who find themselves poor. By ignoring the importance of employment, government policies do a disservice to the people they purport to serve.

The recognition that the act of work itself--not only the income it provides--is necessary for overall health requires a shift in how policymakers design safety-net programs in the US. Many safety-net programs for poor families, such as SNAP, Medicaid, and housing assistance, largely ignore the importance of employment as a path toward economic security and personal well-being. Some offer employment-related services to certain recipients, but poor, nonworking people with disabilities and health issues--including those in their prime working years who do not qualify for federal disability assistance--are largely excluded from these efforts. When safety-net programs ignore the labor force needs of people with disabilities and health issues, they greatly diminish the chances these individuals will ever reap the financial and nonfinancial benefits of work.

This report explores these issues in-depth, summarizing the existing research and presenting data on the intersection of health, labor force participation, and poverty as a basis for a stronger safety net focused on employment for prime-age people with disabilities and health issues.

Read the full report (https://www.aei.org/wp-content/uploads/2020/04/Health-and-Poverty-The-Case-for-Work.pdf).

Key Points

* Labor force participation problems caused by disability and health issues are a major contributor to poverty in this country for people in their prime working years.

* People in their prime working years with limited education report higher rates of activity-limiting health conditions than their higher-educated counterparts and show a weaker connection to the labor market when a condition exists.

* Yet, government safety-net programs generally treat low-income prime-age people with disabilities and health issues (who also often have low levels of education) as incapable of working, essentially depriving them of a viable path toward economic security.

* We need government policies and private-sector efforts aimed at improving the overall health of prime-age people so they can work and financially support their families. Programs such as Supplemental Nutrition Assistance Program, Medicaid, and housing assistance should focus on wellness and employment when serving people with disabilities and health-related issues.

Footnotes:

1/ Arthur C. Brooks, "The Dignity Deficit: Reclaiming America's Sense of Purpose," Foreign Affairs, March/April 2017, https://www.foreignaffairs.com/articles/united-states/2017-02-13/dignity-deficit.

2/ Francis Fox Piven and Richard Cloward, "The Weight of the Poor: A Strategy to End Poverty," Nation, March 2, 1966, https://www.thenation.com/article/archive/weight-poor-strategy-end-poverty.

3/ Ruth Conniff, "Perspectives on Welfare Reform: Punishment Is No Cure for Poverty: 'Welfare Reform,' as Practiced in Several States and Proposed in California, Is a Proven Failure. It Merely Appeals to Angry Voters.," Los Angeles Times, January 10, 1992, https://www.latimes.com/archives/la-xpm-1992-01-10-me-1482-story.html; and Marian Kramer, "Remarks on the National Welfare Rights Union," Social Justice 21, no. 1 (Spring 1994): 9-11, https://www.jstor.org/stable/29766774.

4/ Richard Fording, Joe Soss, and Sanford F. Schram, Distributing Discipline: Race, Politics, and Punishment at the Frontlines of Welfare Reform, University of Kentucky Center for Poverty Research, November 2008, http://ukcpr.org/sites/ukcpr/files/research-pdfs/DP2008-06_fording%20et%20al.pdf; Jennifer E. K. Kendrex, "Punishing the Poor Through Welfare Reform: Cruel and Unusual?," Duke Law Journal 64 (March 2015), https://dlj.law.duke.edu/2015/03/punishing-the-poor-through-welfare-reform-cruel-and-unusual; and Aimee Picchi, "Work Requirements Could Punish Medicaid Recipients," CBS News, January 29, 2018, https://www.cbsnews.com/news/work-requirements-could-punish-medicaid-recipients.